4 EXECUTIVE SUMMARY Over the last 2 years, the economy of Kern County has recorded a level of growth consistent with an expansionary phase of the business cycle. There has been a surge of new jobs, a recovery in residential real estate, and rising utilization of commercial and industrial real estate. The energy market continues to diversify and add value to the region, and the value of agricultural products is at an all-time high. Employment During 213, non-farm employment increased by 2. in Kern County, adding 4,8 jobs to the local economy. This follows an extraordinary 212 when non-farm employment rose by 3.9. Total employment has now surpassed its pre-recession peak, setting new records in each of the past two years. This strength will persist into 214 and 215. During this time, non-farm job growth averages 2.6 per year. Growth will slow in the farm sector, but will remain robust at 4.7 per year. The unemployment rate will continue to fall, dipping to 11.2 in 214 and 1. by 215. Residential Real Estate In 213, the housing recovery gained momentum. The median home price was up by 3, and distressed sales (short sales and foreclosure sales), represented just 18 of the market by year s end. Total sales fell moderately, partially the result of fewer distressed sales which were acquired quickly at rock-bottom prices, and low levels of available inventory. Over the next two years, a continued recovery in the residential real estate market is forecast. Prices are projected to rise by 15 in 214 and 7 in 215. Appreciation will then slow, settling in the 2-4 range by 218. Existing home sales will also rise, reversing the stagnation of the last few years. As prices increase, more homeowners will look to sell, and builders will ramp-up the production of new homes. The population will continue to expand, and new households will enter the homeownership market. 6 Non-farm Employment Growth / Kern County 5 Home Price Appreciation / Kern County

5 EXECUTIVE SUMMARY 214 Commercial Real Estate Like the residential market, Kern County s commercial real estate sector has made progress over the past year. Vacancy rates are improving, falling below other regions of the state. The industrial market is extremely tight, with high demand for warehousing and logistics properties. New Real Estate Development In Kern County, construction activity remains subdued, and is still hampered by the housing bust. However, moderate improvements were observed in 212 and 213, driven by higher home prices and demand for commercial space. Housing production is expected to accelerate. Builders will produce a projected level of 3, new homes in 214 and 3,7 in 215. Most of these will be single-family structures, although production of multifamily units will also increase. As commercial markets continue to tighten, ground-breaking will occur on more projects in 215 and beyond. Energy and Agriculture In California, Kern County is the largest producer of onshore oil and natural gas, and is a leader in alternative energy. Although oil and gas production has fallen from earlier periods, the value of these resources is near record levels. As energy prices climb, production becomes more profitable, enabling more costly extraction and extending the output of Kern s oil and gas properties. Kern County is now home to the nation s largest wind farm. By 215, it will house a portion of the world s biggest solar power facility. To date, more than 8,2 megawatts of alternative energy capacity have been approved in the county, and an additional 3, megawatts are under consideration. In 212, agricultural production increased by 9, climbing to a record-setting $6.3 billion. Over the last decade, output has grown by 84, turning Kern County into the state s second largest agricultural market. units permitted 1, 8, 6, 4, 2, New Residential Units / Kern County Demographics Population growth remains high in Kern County. Bolstered by a young population, growing job opportunities, and affordable home prices, Kern County will continue to attract new residents over the forecast horizon and the growth of population is forecast to modestly accelerate. 214 KERN COUNTY ECONOMIC FORECAST 5

7 DEMOGRAPHICS Population Growth According to the California Department of Finance, Kern County had a population of 866,977 on July 1, 213. net migrants 15, 12, 9, Net Migration / Kern County From July 212 to July 213, Kern County gained a total of 1,695 residents, representing a growth rate of 1.2. This is faster than the growth rate for the broader state, which was.9. 6, 3, -3, In 213, it s estimated that the county gained 1,489 residents through net in-migration. However, the volume of net migration remains far below the levels that prevailed in the early and mid-2s. A rebound in migration to Kern County will result in significantly faster population growth. The natural increase in Kern County accounted for most of the population growth over the last 5 years. Last year, the natural increase added 9,2 residents to the population base. Household Income and Educational Attainment In 213, the median household income in Kern County was $46,65. By comparison, the statewide median was $58,54. Approximately 15 of the population aged 25 and older has obtained at least a fouryear college degree. This is slightly above the neighboring counties to the North, but is below other nearby regions. change Population Growth / Kern County Median Household Income of dollars ! Kern County 45 California

8 DEMOGRAPHICS of total 34 Percent of Population Age 25+ with a 4 Year Degree by County 213 of people 1, Total Population / Kern County Tulare Kings Kern San Fresno Riverside Bernardino Los Angeles San Luis Obispo Ventura Demographic Forecast By 218, the total population will reach 943,8 individuals. Over the period, the county will gain more than 76,8 new residents an annual average increase of 2.. Net in-migration is forecast to accelerate over the next 5 years, as more jobs are created in the farm, professional services, healthcare, retail, and construction sectors. In 214, it s estimated that the population will increase by 3, residents through net migration. From 214 to 218, the population gain from net in-migration is forecast at just under 3,. people 15, 12, 9, 6, 3, -3, Net Migration / Kern County Kern County has a relatively young population, but over the forecast period, the older cohorts will become more prevalent. In particular, the 65-and-over group will account for a larger share of the total population, while the 24-and-under segment will account for a smaller share. 8 CALIFORNIA ECONOMIC FORECAST

9 EMPLOYMENT Job Growth During 213, approximately 4,8 non-farm jobs were created in Kern County, a growth rate of 2.. This increase in jobs follows an extraordinary 212 in which non-farm employment jumped Non-Farm Job Growth / Kern County The farm sector created 5,2 jobs in 213, an increase of nearly 1 over the level recorded in 212. Total employment has surpassed its prerecession peak, setting new records in each of the last two years. The private sector has been responsible for all recent job creation, as government employment has declined for several consecutive years. Over the past year, job gains were strongest in leisure and hospitality, education and health, and retail The leisure sector gained 1,2 new jobs, most of which were observed in the restaurant subsector. Education and health also generated 1,2 new jobs, largely in healthcare facilities. However, growth started to wane in the latter months of the year. The retail industry created 1,1 new jobs. Many of these were the result of growth in general merchandise stores typically big-box stores with a large variety of product lines. of jobs Non-farm Employment / Kern County seasonally adjusted January 29 - January Agricultural Job Growth / Kern County Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan

11 EMPLOYMENT 214 Unemployment Rate / Kern County seasonally adjusted January 29 - January 214 of jobs 28 Non-farm Employment / Kern County Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan The Labor Market Outlook In Kern County, job growth will remain strong. In 214, non-farm employment will increase by 2.5, a gain of almost 6,2 jobs. The farm sector is expected to add another 3, to 4, jobs in 214, on the basis of continued growth in the U.S and California economies that are forecast to approach the peak in the economic cycle over the period. Aside from the farm sector, the largest increase will be observed in education and healthcare. This industry will create almost 1,9 jobs in 214. housing market will rebound in 214 and 215, driven by affordable prices, rapid population growth, and a strong regional economy that is generating more jobs and income. The labor market will be further broadened over the next 2 years with more office using jobs associated with office and medical building development. Hence our positive outlook for more professional business services and healthcare jobs in the forecast. The unemployment rate should continue to improve, falling to 11.2 in 214 and 1. by 215. After a weak showing in 213, the professional and business sector will rebound over the forecast period. In 214, the industry will gain almost 9 jobs. 6 4 Non-farm Employment Growth / Kern County Growth is expected to remain impressive in the construction sector. There is more non-residential building in Bakersfield, and the Solar Star project is expected to create up to 625 new jobs during its construction phase. Furthermore, the KERN COUNTY ECONOMIC FORECAST 11

12 EMPLOYMENT of jobs 7 Agricultural Employment / Kern County of jobs 2 Employment in Construction / Kern County of jobs 62 Employment in Government / Kern County of jobs 32 Employment in Professional and Business Services Kern County 16 Unemployment Rate / Kern County CALIFORNIA ECONOMIC FORECAST

13 RESIDENTIAL REAL ESTATE Home Prices and Sales In January 214, the median selling price for existing homes in Kern County was $21,2. This represents an increase of 19 from January 213. sales Existing Home Sales / Kern County seasonally adjusted January 29 - January 214 Over the past few years, sales of existing homes have declined. In January 214, 424 homes were sold, which is 12 below the level observed in January Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 The inventory of unsold homes has fallen dramatically since 28. As of January 214, there were 3.5 months of supply, creating conditions for a relatively tight market. months of inventory Unsold Housing Index / Kern County January 28 - January 214 As the housing market returns to normal, distressed sales (short sales and foreclosure sales) have become much less prevalent. Such properties now represent only 18 of all transactions, compared to a high of 72 in Jan-8 Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 of dollars 22 Median Price / Existing Homes Kern County seasonally adjusted January 29 - January Distressed Home Sales as Percent of Total Home Sales Kern County January 21 - January Jan-9 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan 1 Jan 11 Jan 12 Jan 13 Jan 14 13

14 RESIDENTIAL REAL ESTATE Housing Market Forecast Home prices will continue to appreciate, as high levels of population and job growth spur demand for housing. In 214, prices will rise by 15. Sales will begin to rebound, reversing the trend of the last few years. In 214, almost 12,8 homes will be sold, and in 215 this total will surpass 14,3. Kern Business Journal, October/November, 213, page 26 In 212 and 213, mortgage rates were near record lows. As the economy strengthens and the Federal Reserve ends it program of Quantitative Easing, mortgage rates will rise. In 214, rates in Southern California will average Home Price Appreciation / Kern County Distressed sales will continue to decline, and over the forecast period, conventional sales will account for the vast majority of all transactions of dollars 3 Median Home Price / Kern County of homes 25 Home Sales / Kern County CALIFORNIA ECONOMIC FORECAST

15 COMMERCIAL REAL ESTATE During the Great Recession, commercial and industrial vacancy rates rose sharply. However, there has been significant improvement in utilization of space since 21, especially in the industrial markets of Southern California. The Kern County industrial market is extremely tight. Vacancy rates began to plummet in 211, and by 213, total vacancy averaged only 2.8. Kern Business Journal, October/November, 213, page 6 In part, demand for industrial space has been driven by the logistics industry. Retail and wholesale companies have moved their facilities to the region, largely as a result of favorable real estate prices and a substantial labor pool. Paramount Logistics Park is a prime example, as it recently added several national chains. Vacancy in the office market is currently at 8.8. The rate is still too high for this point in the economic cycle, but compared to other regions in the state, the Kern County office market appears healthy. The vacancy rate across Southern California, for example, was 16. in 213. Rates are high in the retail market, but continue to improve each year. As the labor marke continues to strengthen and incomes rise, retail vacancy should fall further. Kern Business Journal, October/November, 213, page 2 15

16 NEW DEVELOPMENT New residential construction fell sharply during the housing bust, but rebounded modestly in 212 and 213. There is a delay in the development of new housing due to changes in product, entitlement issues, financing, and the slowness in how the credit markets are thawing. Over the 5 year forecast period, a total of 18,7 new housing units is forecast. Of these, approximately 16,2 will be single family homes. More residential units will be needed to accommodate Kern County population growth. Consequently, the forecast is conservative and should be considered a lower limit of new housing that will produce further ancillary economic activity in Kern County. In 213, the total volume of non-residential investment reached $1.66 billion---the largest annual dollar expenditure on record. The majority of non-residential investment in 213 can be attributed to the Solar Star Projects. With total construction costs of $1.3 billion, the facilities are expected to comprise the largest solar development in the world. New Residential Units / Kern County units permitted 1, 8, 6, 4, 2, Kern Business Journal, October/November, 213, page 24 Even without the Solar Star Projects, 213 would have been a record year, with other nonresidential investment reaching $63 million. A number of large projects are planned for Kern County, including medical facilities, distribution centers, retail outlets, and office complexes. These projects will lead to a rising amount of non-residential investment through 218.

17 ENERGY AND AGRICULTURE Oil and Natural Gas Kern County is the leading producer of oil in the U.S. and the top producer of natural gas in California. In 212, the county was responsible for 141 million barrels of oil and 164 billion cubic feet of natural gas. billions of cubic feet Natural Gas Production / Kern County Over the last two decades, oil production has been in steady decline. Since 1992, total production has fallen by After rising substantially in the late 199s, natural gas production has declined over the past decade. However, since 28, production levels have begun to improve. In 212, more gas was extracted than in any year since 27. Even though natural gas and crude oil production has been relatively stagnant, the values of these resources are at near record levels in Kern County. Higher valued resources make production more profitable and enable more costly extraction, extending production life and therefore, employment and income in Kern County. Alternative Energy Kern County is a large producer of Alternative Energy. In total, more than 8,2 megawatts of capacity have been approved, and another 3, megawatts have been proposed. In August 213, the Catalina Solar Project became fully operational. Located southwest of the Tehachapi and Piute mountains, this facility has a capacity of 143 megawatts, and is operating under a 25-year contract with San Diego Gas & Electric. millions of barrels 225 Oil Production / Kern County billions of 213 dollars 18 Value of Oil and Natural Gas Production Kern County Natural Gas Oil

18 ENERGY AND AGRICULTURE Kern Business Journal, October/November, 212, page 27 In February 213, construction permits were issued for the Solar Star Projects, a pair of solar facilities located near Rosamond. The Solar Star facilities stretch across the Kern- Los Angeles border, but the construction costs for the Kern County portion have been valued at $1.3 billion the largest amount on record. The Solar Star Projects will have a capacity of 579 megawatts. According to SunPower Corporation, the project developer, these facilities will be operational by 215, at which point they will represent the largest photovoltaic power station in the world. Kern County is also home to the Tehachapi Pass, one of California s primary regions for wind power. In particular, the region is host to the Tehachapi Pass Wind Farm and the Alta Wind Energy Center. The Tehachapi Pass Wind Farm, which has been in operation for more than 2 years, is one of the largest facilities in the U.S. It has a capacity of 75 megawatts, and exports energy to a number of California counties. 18 CALIFORNIA ECONOMIC FORECAST

19 ENERGY AND AGRICULTURE 214 Kern Business Journal, February/March, 214, page 1 The Alta Wind Energy Center is the nation s largest wind farm. At the end of 213, the Center had a capacity of 1,548 megawatts, giving it the ability to power 45, homes. In 21, the Center began a 3-year lease with Southern California Edison. In a typical fiscal year, the facility produces more than $4 million in property tax revenues for Kern County government agencies. In recent years, production has risen sharply in Kern County. Over the past decade, total agricultural values have risen by 84, adjusted for inflation. Agriculture In 212, Kern County agricultural production totaled $6.3 billion. This was the second largest total in the state, behind Fresno County. Of all agricultural products, grapes were the most prolific, with total grape production valued at $1.5 billion. Almonds, milk, and citrus fruits billions of 213 dollars Agricultural Production / Kern County were each valued at more than $6 million KERN COUNTY ECONOMIC FORECAST 19

The State of the Economy: Kern County, California Summary Abbas P. Grammy 1 Professor of Economics California State University, Bakersfield Kern County households follow national trends. They turned less

THE STATE OF THE ECONOMY CARLY HARRISON Portland State University Following data revisions, the economy continues to grow steadily, but slowly, in line with expectations. Gross domestic product has increased,

Chapman University A. Gary Anderson Center for Economic Research FOR RELEASE: ONLINE: June 12, 2013; 10:00 a.m. PRINT: June 13, 2013 CONTACT: James Doti, President and Donald Bren Distinguished Chair of

New York State Employment Trends August 2015 Thomas P. DiNapoli New York State Comptroller Prepared by the Office of Budget and Policy Analysis Additional copies of this report may be obtained from: Office

2015 Salt Lake Housing Forecast A Sustainable Housing Market By James Wood Director of the Bureau of Economic and Business Research Commissioned by the Salt Lake Board of REALTORS By year-end 2013 home

COMPREHENSIVE MARKET ANALYSIS REPORTS Policy Development & Research Analysis of the Orange County, California Housing Market As of January 1, 2004 ECONOMIC RESEARCH U.S. Department of Housing and Urban

COMPREHENSIVE MARKET ANALYSIS REPORTS Policy Development & Research Analysis of the Ventura, California Housing Market As of September 1, 2004 ECONOMIC RESEARCH U.S. Department of Housing and Urban Development

The Great Recession on the South Georgia Coast Coastal Georgia Center for Economic Analysis and Student Research March 2012 Don Mathews, Director and Professor of Economics S ince late 2007, the U.S. economy

COMPREHENSIVE HOUSING MARKET ANALYSIS Abilene, Texas U.S. Department of Housing and Urban Development Office of Policy Development and Research As of July 1, 28 Summary Housing Market Area Stonewall Runnels

IHS ECONOMICS US Economic Outlook The US Economic Outlook 14 January 2016 ihs.com Patrick Newport, Director of Long Term Forecasting +1 781 301 9125, patrick.newport@ihs.com The US economy on a moderate

From Widening Deficits to Paying Down the Debt: Benefits for the American People August 4, 1999 Office of Economic Policy U.S. Department of Treasury From Widening Deficits to Paying Down the Debt: Benefits

ECONOMY MARKET VIEW Q2 2016 Although stock market volatility and global economic concerns highlighted the first six months of the year, the U.S. economy continued to expand through the first half of 2016.

61-61 United States By, the U.S. population had surpassed 179 million, a gain of 19.0 percent from. The median age had decreased to 29.5 (28.7 for men and.3 for women), the first decline since 1900. The

Labor Market Outlook CSU Dominguez Hills Kimberly Ritter-Martinez, Economist LAEDC Kyser Center for Economic Research February 3, 2015 Did You Know The amount of new technical information is doubling every

COMPREHENSIVE HOUSING MARKET ANALYSIS Palm Bay-Melbourne-Titusville, Florida U.S. Department of Housing and Urban Development Office of Policy Development and Research As of April 1, 2012 Summary Housing

BUSINESS BRIEFING MANUFACTURED HOUSING VALUATION & ADVISORY A Cushman & Wakefield Business Briefing NOVEMBER 2013 DEMAND CAUTIOUSLY RETURNS TO THE MANUFACTURED HOUSING SEGMENT After years of suppressed

Renter demographics Rental housing serves a large and diverse population of nearly 39 million households. Although renting is most common among young adults, nearly everyone rents at some point in their

August 2014 Gauging Current Conditions: The Economic Outlook and Its Impact on Workers Compensation The exhibits below are updated to reflect the current economic outlook for factors that typically impact

The Recession of 2007 2009 February 2012 A general slowdown in economic activity, a downturn in the business cycle, a reduction in the amount of goods and services produced and sold these are all characteristics

COMPREHENSIVE MARKET ANALYSIS REPORTS Policy Development & Research Analysis of the St. Cloud, Minnesota Housing Market As of January 1, 2004 ECONOMIC RESEARCH U.S. Department of Housing and Urban Development

Monetary Policy Report: Using Rules for Benchmarking Michael Dotsey Executive Vice President and Director of Research Keith Sill Senior Vice President and Director, Real-Time Data Research Center Federal

Housing Recovery Gains Momentum By D Ann Petersen and Christina Daly } The state s strength made it a magnet for those looking for work and contributed to No. ranking for domestic inmigration for a seventh

COMPREHENSIVE HOUSING MARKET ANALYSIS San Antonio, Texas U.S. Department of Housing and Urban Development Office of Policy Development and Research As of October 1, 2008 Summary Housing Market Area Kerr

localinsightssummer mountainland 2015 An economic and labor market analysis of the Area mountainland Summit Wasatch Utah Juab In Depth: Construction's vital role in the economy. Strong Employment Growth

U.S. Department of Commerce International Trade Administration Introduction Exports Support American Jobs Updated measure will quantify progress as global economy recovers. On March 11, 21, President Barack

Labor Market Information SEPTEMBER 2015 Employment Data HOUSTON-THE WOODLANDS-SUGAR LAND METROPOLITAN STATISTICAL AREA () Visit our website at www.wrksolutions.com THE RATE OF UNEMPLOYMENT IN THE WAS UNCHANGED

2015 Farm Bank Performance Report Key Findings The banking industry is the nation s most important supplier of credit to agriculture providing nearly 50 percent of all farm loans in the U.S. $170 billion

MBA Forecast Commentary Joel Kan, jkan@mba.org Weak First Quarter, But Growth Expected to Recover MBA Economic and Mortgage Finance Commentary: May 2015 Broad economic growth in the US got off to a slow

Brief 1 The State of North Carolina: Jobs, Poverty and Family Jeannine Sato, Center for Child and Family Policy The connection among jobs, poverty and family well-being is well established. Research shows

MACRO Report: Review of Wyoming s Economy Economic Update as of June 30, The MACRO Report is a quarterly publication comprised of charts focusing on energy, employment, state revenues, and other indicators

Agents summary of business conditions Q Activity had generally grown solidly on a year earlier, with contacts attributing increased demand to rises in real incomes and credit availability. Growth among

Maryland s Job Growth Continues to Lag in 2014 State behind national growth rates for fourth consecutive year Job growth in Maryland continued to lag the U.S. in 2014 for the fourth consecutive year. Moreover,

Employment in financial activities: double billed by housing and financial crises The housing market crash, followed by the financial crisis of the 2007-09 recession, helped depress financial activities

Preliminary Investment Trends Report ONTARIO: 215 224 Investment in Ontario s construction industry grows over the medium term in line with a number of proposed major resource development, electric utilities

The Economic Impacts of Reducing Natural Gas and Electricity Use in Ontario Prepared for Blue Green Canada July 2013 Table of Contents Executive Summary... i Key Findings... i Introduction...1 Secondary

June Report on Nevada s Housing Market This is the first of a series of reports on Nevada s Housing Market co-presented by the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas

The Sonoran Institute REPORT SUMMARY The California Desert Conservation and Recreation Act of 2015: Impacts on Mining and the Regional Economy INTRODUCTION AND KEY FINDINGS This report explores the economic

For release at 8:30 a.m. EST February 10, 2016 Statement by Janet L. Yellen Chair Board of Governors of the Federal Reserve System before the Committee on Financial Services U.S. House of Representatives

Jeannine Usalcas For most of the 1990s, employment opportunities for young people (age 15 to 24) were scarce. The recession at the beginning of the decade had a lasting effect on the youth labour market.

THE STATE OF THE NATION S HOUSING 2016 KEY FACTS Facts from the 2016 State of the Nation s Housing Report from the Joint Center for Housing Studies of Harvard University PURPOSE The State of the Nation

2 HOUSING MARKETS Although the news was mixed in 214, housing markets made some advances that set the stage for moderate growth. Singlefamily construction continued to languish, but multifamily construction

Real Estate Trends The opening of Golden 1 Center in the fall of 2016 will certainly be one of the most significant events in recent Sacramento history. Golden 1 Center Downtown Sacramento photo credit:

Rental Housing Although slowing, renter household growth continued to soar in 13. The strength of demand has kept rental markets tight across the country, pushing up rents and spurring new construction.

Chapter 2 The Bay Area in 2040 The Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) track and forecast the region s demographics and economic trends to inform

To ensure the functioning of the site, we use cookies. We share information about your activities on the site with our partners and Google partners: social networks and companies engaged in advertising and web analytics. For more information, see the Privacy Policy and Google Privacy &amp Terms.
Your consent to our cookies if you continue to use this website.